Danish labour-market pension fund Industriens Pension announced it has banned all firms from its investment portfolio whose business model is based on tar sands extraction, implementing a decision it originally made in December.
In its newly-published 2019 report on responsible investment and active ownership, the DKK189bn (€25bn) fund said the move came just over a year after it decided to exclude businesses involved in coal mining from its investments in January 2019.
Industriens Pension, which covers industrial sector workers, said in its report: “In view of the major environmental consequences and the lack of opportunities to support the Paris Agreement’s objectives, Industriens Pension has decided to exclude oil companies that mainly extract oil from tar sands.”
The decision has resulted in the addition of 12 new companies to Industriens Pension’s blacklist and the sale of investments in two of these companies – a divestment of DKK65m in total, the fund said.
Industriens Pension said it had opted to divest companies that derived over 5% of their total oil production from tar sands extraction.
There were some companies such as oil firm Royal Dutch Shell which did not exceed this limit, it said in the report, and which were otherwise well on the way to the green transition.
Shell had adopted concrete long and short-term goals for CO2 reductions within its operations, it said, and like Industriens Pension, was a member of the Climate Action 100+ investor initiative, in which companies agreed to align their business strategies with the Paris agreement’s goals.
“In such cases, it is thought that Industriens Pension will be able to contribute to the green transition to a greater extent by trying to influence the companies to divest the remaining exposure to tar sands they may have, rather than excluding the companies,” the Copenhagen-based pension fund said in the report.
Industriens Pension said it was working with Dutch analysis firm Sustainalytics, using the company’s data to identify firms engaging in tar sands extraction.
In its new responsible investment report, Industriens Pension also said that in 2019, its work on responsible investment and active ownership had played a larger role than before, and that it had engaged in talks with almost 500 companies related to responsible investment during the year.
Responsible investment activities were also being made more transparent, it said, by expanding the report’s list of companies it had been in dialogue with, and having decided to publish all votes cast at general meetings on its website from this year on.